Sumalindo's profit drops due to tumbling demand

JAKARTA (JP): Decreasing demand and fierce competition from Malaysian plywood producers have slashed the profit of PT Sumalindo Lestari Jaya and prompted it earlier this year to acquire the shares of a medium density fiberboard (MDF) firm.

Sumalindo's president, Winarto Oetomo, told reporters after an annual stockholders meeting yesterday that the company's sales revenue decreased by 11 percent to Rp 237.4 billion (US$106.4 million) in 1994, while its profit also dropped by 11 percent to Rp 32 billion.

Out of last year's profit, 39.04 percent or Rp 12.5 billion would go to shareholders as dividends -- at Rp 100 per share -- while the remaining Rp 19.5 billion would be used to expand the company's activities.

Palgunadi Tatit Setyawan, a company director, explained that Malaysia, which is a new comer on the world's plywood market and currently has the advantage of tariff preference from the United States, is a major plywood importer.

However, he was optimistic that Malaysia would soon reach the point where it could no longer enjoy the privilege, giving way to Indonesian exports again.

Winarto was also optimistic that the end of recession in major importer countries would boost Indonesia's plywood exports again.

Sumalindo, a subsidiary of PT Astra International and PT Barito Pacific Timber, currently exports 90 percent of its products, mostly plywood. Its major importers include Japan, the United States and European countries.

No figures on exports were available yesterday from Sumalindo. Earlier reports show, however, that Indonesia's plywood export prices dropped from an average of $474 per cubic meter in 1993 to $457 in 1994 and to $390 at present. The country's revenues from plywood exports also dropped by nearly 12 percent from $4.22 billion in 1993 to $3.72 billion last year.

MDF

Winarto asserted that Sumalindo, which produced only 205,000 cubic meters of plywood last year from its installed capacity of 250,000 cubic meters, would not rely solely on plywood as a major income earner.

"In the future, part of the plywood market will be taken over by the MDF industry and plywood will become a luxury good," he said, adding that both materials had advantages of their own and in many cases one could not replace the other.

Sumalindo, he said, would continue to expand its activities to the medium density fiberboard industry, while continuing to maintain its present share in the plywood market.

Sumalindo, therefore, signed an agreement in January to acquire a 75 percent stake of PT Nityasa Mandiri, a medium density fiberboard company at Rp 26.25 billion, he said.

Nityasa Mandiri is currently building three medium density fiberboard plants, the first of which is expected to start operation early next year, he added.(pwn)